Are we
there yet?

It’s usually right around Warsaw, North Carolina that we all start to get a little crazy.

We’ll have been traveling for a couple of hours by this point, but we have one or two more still left to go before we can hit the beach. When the kids were little, it was often one of them who would pipe up:

“Are we there yet?”

But let’s be one hundred percent honest: It’s never just the kids who are feeling like the journey is taking too long. Mom or dad are just as likely to feel like they should have already arrived. We’re family, but we’ve all been on the journey too long.

(And don’t even get me started on the time the dog ate her leash and we had to call the emergency vet…)

“Are we there yet?” seems like a particularly relevant sentiment right now.

For more than twenty years, you and Redwoods have been on an incredibly important journey: To end child sexual abuse and preventable drowning deaths, and to build a world where everyone is safe and has access to the opportunities that will help them to thrive.

When we started on that journey, society tolerated things that never should have been considered tolerable: child sexual abuse, bullying, harassment, drownings. We might have lamented these injustices but, whether implicitly or explicitly, society collectively accepted their inevitability.

It’s as if we passed a key milestone in our journey, only to discover that the weather conditions ahead are likely to present some challenges.

Under the surface, however, many of us were already in search of solutions. Whether it was advocating strict protocols for appropriate touch, or undertaking aggressive approaches to lifeguard training, we were often told that we were being unreasonable. There were times when it felt like our journey was almost impossibly long.

Then we turned a corner. While it was hard to perceive at first, societal expectations changed. We were no longer navigating in the same environment we had been battling through before.

We’ve seen this most prominently in cases of child sexual abuse. In one instance, a young childcare worker was caught touching young girls inappropriately, in ways we — and the community — might previously have considered wrong, but “mild”. That worker was sentenced to 120 years in prison, and the settlements related to this case settled well into the excess layer of damages. While this trend is most pronounced in cases of abuse, we are also seeing high settlements and plaintiff-friendly jury verdicts in cases ranging from workplace injury to aquatic safety.

These verdicts are a symptom of a broader shift in expectations. The problem is no longer whether people will support our prevention and safety efforts. Instead, it’s that a society that is increasingly intolerant of abuse or negligence—and increasingly mistrustful of institutions of all kinds—will perceive us as not moving fast enough.

#MeToo and the other manifestations of the search for social justice are all profoundly healthy—and long overdue—for society. They are what needed to happen in order to move us along on the journey. And yet, these very changes also bring new and potentially existential challenges for all of us.

It’s as if we passed a key milestone in our journey, only to discover that the weather conditions ahead are likely to present some challenges. We thought we were close to the beach, but we now know we have still further to go. We can’t be the only ones who find ourselves sighing:

Are we there yet?

Setting Our Destination

In October of this year, Jim Clark—President and CEO of Boys & Girls Clubs of America—took to the stage at the BGCA Midwest Leadership Conference in Chicago. Citing the same changing societal expectations referenced above, Jim called for an audacious response from the movement:

Build a Zero Incident Culture.

Later that same day, I asked a room full of Club leaders to envision what their Club will look like once they have achieved Jim’s goal. There was no question among those attending that this was an important, necessary goal. Across a wide range of examples of misbehavior they had identified or experienced, the attendees shared stories that made clear what we already know: Abuse and misconduct are a threat in every single community.

And yet when it came to identifying what a truly Zero Incident Culture might look like, there was a tense and daunting silence. Despite the fantastic work that was already being done, the destination felt too far away.

Gradually, these leaders started grappling with the next stage in the journey ahead. From inadequate budgets to tight labor markets, there were no shortage of challenges identified. Yet there was also a determination to step up to those challenges—and a hunger for finding relevant partners to join them in that work.

We might not be there yet, but, that day, we were identifying a route that would move us toward our shared goal.

Gradually, these leaders started grappling with the next stage in the journey ahead. From inadequate budgets to tight labor markets, there was no shortage of challenges identified.

Likewise, at the YMCA General Assembly in Anaheim, Kevin Washington, CEO of Y-USA, had a similar message. He told the thousands of attendees that keeping kids safe from sexual abuse was the number one issue facing the Y and all organizations that care for kids. It wasn’t coincidental that we showed up with that specific conversation in mind.

Rather than bringing our usual booth and marketing materials, we transformed our space into a childcare room. We then used that environment to focus almost exclusively on the threat of abuse and what it means for the organizations we work with. The response from the community was overwhelmingly positive. Y professionals, many of whom we had worked with for years, engaged enthusiastically with the fact that we can and must look at almost every aspect of our operations and environment, and begin to see and do things differently.

Over the past year, we’ve had similar experiences with staff and leadership from Jewish community organizations and camps too. That’s the thing about long journeys. Even—perhaps especially—when we are tired and fatigued, there are new experiences to be had and perspectives to behold. Sometimes you have to take a deep breath, take a look out the window, and accept that you’re in it for the long haul.

But who you’re traveling with matters.

Welcoming Fellow Travelers

A few years ago, a grainy online video was making the rounds of the internet. It featured a shirtless man dancing on a hill. His moves were ridiculous. Yet soon he was joined by another young man who mimicked and built on his routine. Within minutes, they were surrounded by a vast crowd of dancers.

This video—popularized by writer David Sivers—has now been viewed some 6,000,000 times. While enjoyable in its own right, it also teaches us about the importance of cultivating what Sivers describes as ‘first followers’: The people who are willing to take a risk and support your efforts early on. It is these people who will make or break a movement.

Whether it’s the recent School Strikes for Climate, which started with one child, then eventually spread around the world, or the movement for the abolition of slavery—which was originally founded by a tiny collection of escaped slaves, activists and idealists—first followers have been critical to the success of all effective social movements. They have also been critical to every success that Redwoods has ever been a part of. Indeed, we are no strangers to being first followers ourselves.

When we disrupted YMCA meetings to talk about the unacceptable rate of drownings, we were told by some that we were being unreasonable. Yet a core group of Y leaders stepped up and radically improved pool safety across the movement. When we highlighted the dangers of 12- and 15-passenger vans, open minded organizations not only began phasing out these vehicles, but they revisited the way that they delivered services in the first place. In fact, debate over 12- and 15-passenger vans became a driving force for opening up programming located inside schools, eliminating the need to transport kids in the first place. This move didn’t just make kids safer. It pushed YMCAs to provide services where they were needed most, and increased program revenue dramatically in the process.

Navigating Tough Terrain, Together

In these efforts, we have always benefited from the knowledge, expertise and experience of our customers—telling us what they are seeing in the field and helping to inform our guidance as a result. Increasingly, we are now adapting the format of our online events to encourage such a two-way flow of information. For example, our recent online aquatics discussions and child abuse prevention workshops brought together youth-serving professionals to share expertise with each other. Rather than Redwoods acting as a teacher, we served as a facilitator. As a result, we all gained powerful insights on how youth-serving professionals are navigating the changing environment they now find themselves in.

In every case, it means building a clear-eyed understanding of the competitive landscape while continuing to stay true to core values.

And that environment is undoubtedly changing. Whether it’s the growing popularity of internships as an alternative to a job at summer camp, the lure of for-profit gyms over traditional YMCAs or JCCs, or the fact that kids may be more inclined to play video games at home rather than shoot pool at the Club, organizations are facing significant competitive pressures. Leaders will need to make sure that they are adapting to changing circumstance. Sometimes that will mean mergers or consolidating resources. Sometimes it will mean identifying new opportunities for service. In every case, it means building a clear-eyed understanding of the competitive landscape while continuing to stay true to core values.

At Redwoods, too, we see a changing competitive landscape. Driven in large part by the societal trends outlined above, we raised our rates in 2019—having already raised them significantly in 2018. We did so reluctantly, knowing we might lose up to 50% of our customers to lower priced competitors. We figured many of our closest and most valued partners might find this a step too far—and we certainly expected them to be asking us:

“C’mon – aren’t we there yet?!”

Yet our account retention remained at 90%—still far above industry norms. And, we also welcomed many new customers. In fact, we beat our target for new business revenue by more than 20%, in addition to exceeding our retention goal. This performance suggests two things:

1) Our customers see real value in the work that we do together.
2) Other insurance companies are experiencing the same social dynamics we are and the terms they’re offering in the market are even less attractive than ours are.

At year-end, the insurance market got even tougher for youth-serving community organizations. More than two-thirds of our customers shopped for alternatives to Redwoods (more than three times our usual rate) because of our renewal terms. But, of those who shopped, eighty four percent stayed with us. (Our usual retention of shoppers is seventy five percent, which is still much higher than industry averages.) What they found was all major carriers are talking openly about the growing cost of risk, some pulling out of the youth-serving space entirely and others are raising rates precipitously or only very selectively renewing.

We understand why this is happening. Indeed, we continue to see claims settling for much higher numbers than they ever would have in the past. Consequently, in 2020 we will have to ask customers to pay more for coverage once again. But if we are going to ask our customers to pay more on this journey, then we too must share the burden.

An Aggressive Focus on Expenses

We reduced our combined operating ratio (revenue minus losses minus expenses) from 143% to 118% between 2018 and 2019. If not for weather-related property losses toward the end of the calendar year, we’d have finished near a 105. While not yet profitable, this progress is still almost unprecedented in the commercial insurance space, especially given the challenges we—and you—face.

Written Premium
Earned Premium
Contribution Margin

It is not, however, enough. We are looking even more aggressively at our own expenses. We must be better stewards of your money. In fact, we are budgeting for a 25% decrease in our own operating costs in 2020. And we are doing this while staying true to our long-standing commitment, from which we have never wavered, to keep our employees’ jobs safe.

When taken in conjunction with our continued efforts with partners to create safe communities and control losses, we are projecting a combined operating ratio of less than 100% in 2020. Then, we’ll know the beach is near.

This is not a joyous part of our work. We would much rather be talking about keeping kids safe than reducing expenses or raising rates. Yet they are related. We can’t save lives if we can’t be profitable. You can’t change lives if you’re not financially sustainable. Everything we are currently working through—whether it’s asking more of our customers, our brokers or ourselves—is in pursuit of delivering on a core central promise:

We are here. For good.

Seizing the Moment

In the Customer Stories included with this report, you will find examples of how we are working with our customers to not simply weather the challenging environment, but to seize it as an opportunity to rethink the insuring relationship. The journey we are on is a long one. Many of you have been traveling with us from the beginning. We are likely all going to have moments when we feel exhausted, frustrated or disheartened—and that’s why we must continue to keep an eye on the progress we are making. And we must also take heart from the growing number of people who are joining us in this migration.

The destination of travel is set—society is finally accepting the fact that children, all children, deserve to be safe, respected and nurtured. The journey has begun. And we are about to crest the bridge from which we can see the beach ahead.

Thank you for traveling with us. We are closer than we have ever been to reaching our destination. Although, let’s be honest, there will also be plenty more adventures to come.

Kevin's Signature
Kevin A. Tranpani Co-Founder, President & CEO The Redwoods Group